News: Singapore narrows GDP growth forecast for 2019

May 22, 2019

This comes as the Singapore economy grew by 1.2 percent year-on-year in Q1 of 2019 compared to the 1.3 percent growth in Q4 2018.

With growth in most regional economies expected to moderate this year, the Ministry of Trade and Industry (MTI) narrowed its gross domestic product (GDP) forecast for 2019 to “1.5 to 2.5 percent” from “1.5 to 3.5 percent” previously.

The downgrade comes as the Singapore economy grew 1.2 percent year-on-year in the first quarter of 2019, slightly lower compared to the 1.3 percent growth registered in Q4 2018.

Manufacturing, which accounts for one-fifth of the economy, eased 0.5 percent year-on-year, a reversal from the 4.6 percent growth registered in the preceding quarter.

The construction sector, on the other hand, registered its first quarter of year-on-year growth following 10 consecutive quarters of contraction. The sector grew 2.9 percent year-on-year in Q1 2019, a turnaround from the 1.2 percent drop seen in the previous quarter, as construction output improved due to an increase in private sector and public sector construction works.

MTI noted that the global growth outlook continued to be clouded by uncertainties and downside risks.

It pointed to the risk of a further escalation in the trade conflicts between the US and China, following the recent trade actions taken by the two countries.

“Should this happen and trigger a sharp fall in global business and consumer confidence, investments and consumption could decline, thereby adversely affecting global growth.”

With this, MTI expects key outward-oriented sectors in the Singapore economy to slow this year.

The manufacturing sector will likely witness a sharp slowdown in growth while the wholesale trade and transportation & storage sectors are expected to ease.

“Nonetheless, there remain pockets of strength in the Singapore economy,” it said.

The information & communications sector, for instance, is projected to remain healthy, while the education, health & social services segment’s growth will likely be resilient.

The construction sector is also expected to see a “sustained turnaround after three consecutive years of contraction, as the pickup in contracts awarded since the second half of 2017 is expected to continue to translate into construction activities for the rest of the year”.